Correlation Between Arts Way and Argo Blockchain

Can any of the company-specific risk be diversified away by investing in both Arts Way and Argo Blockchain at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Arts Way and Argo Blockchain into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Arts Way Manufacturing Co and Argo Blockchain PLC, you can compare the effects of market volatilities on Arts Way and Argo Blockchain and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Arts Way with a short position of Argo Blockchain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arts Way and Argo Blockchain.

Diversification Opportunities for Arts Way and Argo Blockchain

0.11

Correlation Coefficient

Arts Way  Argo Blockchain

Average diversification

The 3 months correlation between Arts and Argo is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Arts Way Manufacturing Co and Argo Blockchain PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Argo Blockchain PLC and Arts Way is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Arts Way Manufacturing Co are associated (or correlated) with Argo Blockchain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Argo Blockchain PLC has no effect on the direction of Arts Way i.e., Arts Way and Argo Blockchain go up and down completely randomly.

Pair Corralation between Arts Way and Argo Blockchain

Given the investment horizon of 90 days Arts Way is expected to generate 18.63 times less return on investment than Argo Blockchain. But when comparing it to its historical volatility, Arts Way Manufacturing Co is 4.29 times less risky than Argo Blockchain. It trades about 0.01 of its potential returns per unit of risk. Argo Blockchain PLC is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  11.00  in Argo Blockchain PLC on August 15, 2024 and sell it today you would earn a total of  0.00  from holding Argo Blockchain PLC or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

Arts Way Manufacturing Co  vs.  Argo Blockchain PLC

Arts Way Manufacturing

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Arts Way Manufacturing Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Arts Way showed solid returns over the last few months and may actually be approaching a breakup point.

Argo Blockchain PLC

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Argo Blockchain PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile forward-looking signals, Argo Blockchain may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Arts Way and Argo Blockchain

The main advantage of trading using opposite Arts Way and Argo Blockchain positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arts Way position performs unexpectedly, Argo Blockchain can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Argo Blockchain will offset losses from the drop in Argo Blockchain's long position.

The idea behind Arts Way Manufacturing Co and Argo Blockchain PLC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.